Reaction to Supreme Court Ruling on Retail Pricing

Reaction to Supreme Court Ruling on Retail Pricing


The Supreme Court ruling last week to abandon a 96-year-old ban on manufacturers and retailers setting price floors for products has had led to some interesting reactions from around the CE/Imaging industry. In a 5-4 decision, the court said that agreements on minimum prices are legal if they promote competition. The ruling means that accusations of minimum pricing pacts will be evaluated case by case. The Supreme Court declared in 1911 that minimum pricing agreements violate federal antitrust law.

Gary Shapiro, president and CEO of the Consumer Electronics Association (CEA) released the following statement shortly after the decision was announced. “CEA applauds the Supreme Court decision today reversing the per se rule against resale price maintenance. The Supreme Court holding that the “rule of reason” should apply to the legality of manufacturer pricing decisions, means simply that all the facts will be examined before a finding of illegality, replacing a black and white rule of illegality in every case,” Shapiro said. “Reasonableness has come back to the antitrust laws, and in the consumer electronics industry, where sales training, industry marketing, and after-sales service are highly valued by manufacturers and reputable retailers, it makes perfect sense to consider these factors when evaluating a manufacturer’s requirement that threshold prices be maintained.”

The Photo Marketing Association released the following statement this week: “The Supreme Court decision presented two very good arguments in support of moderating the anti-trust ruling from 100 years ago. PMA sees this support of competition in the retail market place as a good way to allow consumers to choose what they want from a retailer. Through resale price maintenance consumers can have additional options to choose from depending on what they want; low-price, low-service; higher-price, higher-service; or something in between. The court did recognize that ever-present danger of unlawful price fixing that can monopolize profits and advised keeping a watchful eye on price fixing associated with the development of cartels that limit competition.”

Connecticut-based retail analyst Martha Refik felt, at least initially, the only safe prediction to make is, “prices will undoubtedly rise at retail, at least in the short-term.” Refik added, “You’ll hear a lot of grumblings but one thing doesn’t change, the little guys still need to win their customers over with selection, service and expertise. This ruling doesn’t change that fact.”